Correlation Between Advanced Energy and Flux Power
Can any of the company-specific risk be diversified away by investing in both Advanced Energy and Flux Power at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Advanced Energy and Flux Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Advanced Energy Industries and Flux Power Holdings, you can compare the effects of market volatilities on Advanced Energy and Flux Power and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Advanced Energy with a short position of Flux Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advanced Energy and Flux Power.
Diversification Opportunities for Advanced Energy and Flux Power
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Advanced and Flux is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Advanced Energy Industries and Flux Power Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flux Power Holdings and Advanced Energy is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Advanced Energy Industries are associated (or correlated) with Flux Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flux Power Holdings has no effect on the direction of Advanced Energy i.e., Advanced Energy and Flux Power go up and down completely randomly.
Pair Corralation between Advanced Energy and Flux Power
Given the investment horizon of 90 days Advanced Energy Industries is expected to generate 0.44 times more return on investment than Flux Power. However, Advanced Energy Industries is 2.25 times less risky than Flux Power. It trades about 0.05 of its potential returns per unit of risk. Flux Power Holdings is currently generating about -0.01 per unit of risk. If you would invest 8,581 in Advanced Energy Industries on August 29, 2024 and sell it today you would earn a total of 3,140 from holding Advanced Energy Industries or generate 36.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Advanced Energy Industries vs. Flux Power Holdings
Performance |
| Timeline |
| Advanced Energy Indu |
| Flux Power Holdings |
Advanced Energy and Flux Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Advanced Energy and Flux Power
The main advantage of trading using opposite Advanced Energy and Flux Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Advanced Energy position performs unexpectedly, Flux Power can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Flux Power will offset losses from the drop in Flux Power's long position.| Advanced Energy vs. MKS Instruments | Advanced Energy vs. Axcelis Technologies | Advanced Energy vs. Entegris | Advanced Energy vs. Cohu Inc |
| Flux Power vs. Bloom Energy Corp | Flux Power vs. Eos Energy Enterprises | Flux Power vs. Sunrise New Energy | Flux Power vs. GrafTech International |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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